What is PPC? Pay-Per-Click Explained

Updated on May 8, 2019, with new examples and updated terminology.

Pay-per-click (PPC) marketing is a complex digital marketing channel. It presents a significant opportunity for digital marketers to grow their traffic and conversion metrics. But without a smart strategy and careful tactics, pay-per-click can cause major headaches.

We’ve put together the answers to some of the most common questions we get asked to better explain PPC marketing.

If you’re looking to skip ahead, here’s what we’ll cover on this page:

What is PPC Marketing?
What do PPC Ads Look Like?
What are the Major PPC Platforms?
Should my Business Try PPC Marketing?
What are the Potential Benefits of PPC Marketing?
What are the Potential Pitfalls of PPC Marketing?
What Type of PPC Ads Should my Business Buy?
What are the Basics of a Search Network Campaign?
What are the Basics of a Shopping Campaign?
What are the Basics of a Display Network Campaign?
Where do I Learn More About PPC?

If you want to start from the top, let’s dive in!

What Is PPC (Pay-Per-Click) Marketing?

Pay-per-click marketing is an advertising channel where marketers don’t pay by the impression or purely for ad placement. The bid amount may affect placement, but the advertiser only pays when their ad is clicked by an online user.

The most common PPC ad format appears on search results pages of search engines like Google or Bing. Advertisers have the opportunity to place their brand, product, or service front and center in the form of an ad that targets a specific keyword or behavior.

Here’s an above-the-fold look at a recent results page for the query ‘solar panels’.

Everything highlighted in red is an ad. Yep, it’s everything on this search engine results page (SERP).

What Do PPC Ads Look Like?

Most PPC ads appear in search results, but not all. There are three main types of pay-per-click marketing ads.

Text Ads

A text ad is composed of a written copy by the advertiser. Format and character limits are dependant on the PPC platform you are working on. Text ads are most commonly triggered through the Search Network- when users search on Google or Bing for a keyword held within your PPC campaign. We’ll get to how keywords and ads are selected later on this page.

Below is a look at a text ad on a Google SERP through Google Ads:

Display Ads

A display ad is typically delivered in a format of an image or motion graphic. PPC platforms that offer display advertising often have size and content requirements advertisers must comply with when creating their visual creative.

Display ads typically show up and are available for advertising placement on websites across the internet. Ads are contextually placed on websites where the advertiser’s target market visits.

Here is an example of a display ad:

Shopping Ads

A shopping ad is typically delivered after a searcher submits a query through a search engine or shopping engine. Shopping ads typically contain an image of the product, the price of it, and any pertinent specifications like size, color, dimensions, etc.

This is what a typical shopping ad looks like:

What are the Major PPC Platforms?

Countless platforms offer text, display, and shopping PPC ad placement but there are three core platforms you can’t ignore:

Google Ads

Google Ads is Google’s primary PPC advertising platform. Google offers pay-per-click advertising on its Search Network and search partner sites along with image and video advertising on its Display Network. Advertising on YouTube is available through the Google Ads platform.

Microsoft Advertising

Microsoft Advertising (formally Bing Ads) is Microsoft’s PPC advertising platform. The platform allows pay-per-click advertising on its Search Network (Bing.com) and search partner sites (including Yahoo.com) along with native advertising on Microsoft-owned web properties (such as MSN).

Amazon Advertising

Over 46% of product-focused searches begin on Amazon.

Amazon Advertising is the fastest-emerging PPC platform for e-commerce retailers. Amazon empowers advertisers to create display- and shopping-focused campaigns that promote their products on Amazon’s shopping network.

Should my Business Try PPC Marketing?

If you have a website, you have to consider PPC advertising as a marketing channel. The key word is ‘consider’. Just because you have a website does not mean that you should engage in PPC.

Before starting your first PPC marketing campaign, consider your budget, advertising goals, competition, and risk tolerance:

1. Do you have a clear conversion goal? PPC advertising is most effective when you can match dollars spent to a conversion like a transaction or lead form completion. Clear conversion goals help you do that.
2. What are you trying to accomplish? PPC is great for responsive, nimble advertising. But when you stop spending, PPC stops producing. If you want to balance this with earned media, try adding search engine optimization to the mix.
3. How much can you spend on PPC before you get a return on investment? Reality check: Your ads won’t produce instant results. Be ready to spend some money without a return. It might be $50 or $50,000. Just have a number in mind.

You don’t have to have a definitive answer for all of these questions. You do need to consider them before you dive in.

What are the Potential Benefits of PPC Marketing?

There are four distinct benefits to PPC marketing:

1. Speed. Advertisers can quickly drive a significant amount of traffic to their website. If managed effectively, PPC marketing is one of the fastest digital marketing strategies to drive traffic and conversion growth.
2. Precision. Creating a highly-targeted audience to show your ads to is straightforward—especially on Search and Shopping Networks.
3. Agility.Performance data is available almost immediately, which makes it easier to quickly make adjustments to improve your chances for a successful campaign.
4. Measurement.With effective conversion tracking, advertisers can see the ROI of their ads.

What are the Potential Pitfalls of PPC Marketing?

While there are distinct advantages to PPC, the advertising model does come with potential pitfalls advertisers should be aware of.

1. Cost. Depending on your competition and the industry you work in, PPC marketing can be very expensive. Some ad placements can cost over $100 per click! (Don’t worry, this isn’t common, but it does show the variability of the PPC market due to its auction model.)
2. Waste. Due to the technical nature of most PPC platforms, wasted ad spend is common without knowledge of the platform.
3. Volume. PPC marketing, especially on the Search Network, often depends on search volume. If users aren’t searching for the product or service you offer, Search and Shopping ads won’t generate much traffic.

What Type of PPC Ads Should my Business Buy?

The type of PPC ads you buy depends entirely on your marketing strategy and goals. It’s important to keep the conversion funnel in mind when deciding the type of networks and ads you’ll show up on.

Display Advertising for Top-of-Funnel Marketing Strategies

If want to drive awareness and interest, pay-per-click ads on display networks are a solid option. Display Network and display ad strategies are geared for advertisers who want to get in front of potential customers who are starting research, aren’t ready to buy, but may remember a brand for later purchase.

PPC display is top-of-funnel, but it’s still targetable while still allowing creative freedom. Not only can you take advantage of user targeting options to help ensure your ads show to the right people, but you can also use image and video assets to capture a user’s attention. These creative options provide the opportunity to stand out from your competitors and convey a message effectively, creating new potential customers and growing the size of your sales funnel from the top down.

Display Networks typically offer lower average cost-per-click figures, allowing advertisers to get a higher number of impressions and clicks compared to the Search Network. However, display network traffic is typically lower in quality than from the Search Network when looking at the intent of those visitors.

Search Network and Shopping Campaigns for Mid- and Low-Funnel Strategies

Potential customers are searching for your brand or the products and/or services you offer. They’re either aware of a problem and searching how to solve it, aware of a solution and searching for which businesses can help them, or aware of your brand and searching for you specifically. They are in the desire and action portions of the marketing funnel.

Pay-per-click ads through the Search Network will help ensure you’re fully visible, front and center on a SERP when users submit these queries. Search Network and Shopping traffic is typically more expensive than the display network, but searches are much further down the funnel—that means they’re more likely to convert on what you’re offering.

What are the Basic Components of a Search Network Campaign?

Search Network campaigns contain a large handful of components required to enable eligible ads on search engines like Google and Bing.

Let’s take a look at those components:

Campaigns

A campaign is the highest level of organization with a PPC account. Each campaign you create will house a set of ad groups, each of which in turn house a list of keywords and corresponding text ads. All settings which govern your ads (location targeting or ad scheduling being just two examples) are set at the campaign level. Furthermore, each campaign you create will have a daily budget.

To learn more about the various settings you can take advantage of within a given campaign, take a look at part one of our guide to building a Google Ads account.

Ad Groups

As mentioned above, each ad group you create will contain a list of keywords along with a corresponding set of ads which are eligible to show when one of those keywords is triggered in an auction. Your keyword lists should be granular and tightly-themed so you can keep your account well organized and tailor your ad copy closely to your keywords. This will help improve any ad’s relevance to the keywords it’s tied to and maximize quality scores.

However you decide to separate your ad groups, it should be done consistently throughout each campaign. For example, if you have a campaign for each category on your website, you can differentiate each ad group by sub-category. You can, of course, adapt that ad group’s structure as needed based on performance over time.

To understand the importance of structure to your ad groups and campaigns, see part two of our guide to building a Google Ads account.

Stepping back for a moment, here is the organization hierarchy of a PPC account when looking at the structure and relationship between campaigns and ad groups:

Keywords and Match Types

Keywords are terms and phrases you identify that determine where you want your ad to show up when someone searches for a related search query. When any of your keywords are triggered by a user’s search, it is entered into an auction with competitors’ keywords which have also entered that auction.

Keywords are set in one of four match types:

1. Broad Match
2. Modified Broad Match
3. Phrase Match
4. Exact Match

The match type you select for each keyword will govern which queries are allowed to trigger your ad.

For example, if you bid on the keyword “rain jacket” in Broad Match, the search query “waterproof fleece” may be close enough in relation for Google’s satisfaction to trigger that keyword and your corresponding ad. However, if you were to bid on the keyword “rain jacket” in Exact Match, then only the search queries “rain jacket” or “rain jackets” would be eligible to trigger your PPC ad.

Advertisers can also add negative keywords to campaigns and/or ad groups. Negative keywords are terms or phrases you want to ensure Google does not trigger one of your ads for.

A common instance is using the negative keyword “free”. Using the “rain jacket” example, the search query “free rain jacket” would not trigger that keyword if you added “free” as a negative keyword to this campaign or ad group.

Text Ads and Extensions

Text ads are what users are shown on the SERP after they submit a query which has triggered one of your ads. Text ads should relate directly to the list of keywords they’re tied to within an ad group and should be tailored to your landing page content so that a user’s expectations are appropriately set if they choose to click on your ad.

There are four components to each text ad:

Headlines: Up to three (minimum of two) with a character limit of 30 for each headline.

Description Lines: Up to two (minimum of one) with a character limit of 90 for each description line.

Path: Up to two (no minimum) which will show after the domain URL in the ad unit itself. These are solely for aesthetic purposes and do not impact the actual landing page URL you want to send a user to.

Final URL: The landing page URL you’ll send the user to once they click on your ad.

Each text ad must meet editorial guidelines and will risk being disapproved (ineligible to generate ad impressions and clicks) if they violate any of those guidelines. While similar, Google and Microsoft Advertising do have different editorial guidelines.

In addition to the actual text ad unit (shown above), advertisers can also use ad extensions to give searchers more information about their business directly on the SERP. These extensions appear underneath your text ad and allow you to take up more room on the SERP when they show.

Here is a look at a PPC ad effectively using the sitelinks ad extension on their existing text ad:

Landing Pages

A landing page is the page a visitor lands on after they click on your PPC ad. The URL of this page is equivalent to the final URL in your text ad. The landing page you choose should relate directly to the ad copy used in your text ad so that a user sees what they expect once they click through. Otherwise, you risk users bouncing off your site and losing potential customers.

An optimal PPC landing page should be focused on the action you want the user to take. For instance, if you want the user to buy a specific product from you, the landing page you use should focus on that product with high-quality content and an obvious, easy option to buy that product. As such, a landing page should limit the user’s options to navigate away from this action that you want the user to take.

Here are 7 little steps to create a killer PPC landing page.

What are the Basic Components of a Shopping Campaign?

E-commerce retailers can utilize shopping ads offered by Google or Bing, among other platforms. These ads allow advertisers to showcase their products directly on a SERP. Potential customers can view essential information (e.g., price, product image) before they click through to your site. To generate these ads from your PPC account, you must format and upload a product data feed to a corresponding Merchant Center account which is then linked to your PPC account.

Once a product feed is properly uploaded into Merchant Center, you’ll be able to create shopping campaigns. These campaigns do not use keywords or text ads; Google matches the information in your product feed (e.g., product title, product description) to match a product to a user’s search query. Google then uses the essential information from your feed about that product to automatically generate a shopping ad.

To get the most out of your shopping ads and campaigns, it’s crucial that you have an optimized product feed.

What are the Basic Components of a Display Campaign?

Display network campaigns in a PPC account are a great way to generate awareness of your brand, product, and/or offers. Display campaigns typically contain image ads or video ads which are then shown to users who match your targeting criteria on websites that opt-in to show display ads on their website.

Advertisers have several audience targeting options at their disposal with display campaigns, including:

1. User demographics
2. User interests (based on search history)
3. Users in-market for specified products or services
4. Webpage content

Advertisers can also utilize display ads to remarket to audiences of users who’ve visited their site already. For example, if you want to show an image ad displaying a special discount only to users who’ve visited your site but didn’t convert, you can set up a remarketing campaign to do just that.

How do I Learn More About PPC?

Pay-per-click marketing is a complex digital marketing tactic. It can be a risky marketing channel if not managed properly.

But it offers significant value and it has to be a core building block for any successful digital marketing campaign. Know your goals, set your budget, and test carefully.

If you’d like to learn more, we are constantly adding PPC-focused content to the Portent blog.

Portent also offers PPC marketing services for companies big and small. If you’re interested in working with Portent or learning more about how we could work together, reach out!